曼昆宏观经济学最新英文版参考答案第26章.docx

Chapter 26Problems and Applications1.a.The bond of an eastern European government would pay a higher interest rate than the bond of the U.S. government because there would be a greater risk of default.b.A bond that repays the principal in 2025 would pay a higher interest rate than a bond that repays the principal in 2005 because it has a longer term to maturity, so there is more risk to the principal.c.A bond from a software company you run in your garage would pay a higher interest rate than a bond from Coca-Cola because your software company has more credit risk.d.A bond issued by the federal government would pay a higher interest rate than a bond issued by New York State because an investor does not have to pay federal income tax on the bond from New York state.2.The stock market does have a social purpose. Firms obtain funds for investment by issuing new stock. People are more likely to buy that stock because there are organized stock markets, so people know that they can sell their stock if they want to.3.When the Russian government defaulted on its debt, investors perceived a higher chance of default (than they had before) on similar bonds sold by other developing countries. Thus, the supply of loanable funds shifted to the left, as shown in Figure 1. The result was an increase in the interest rate.Figure 14.Companies encourage their employees to hold stock in the company because it gives the employees the incentive to care about the firms profits, not just their own salary. Then, if employees see waste or see areas in which the firm can improve, they will take actions that benefit the company because they know the value of their stock will rise as a result. It also gives employees an additional incentive to work hard, knowing that if the firm does well, they will profit.But from an employees point of view, owning stock in the company for which she or he works can be risky. The employees wages or salary is already tied to how well the firm performs. If the firm has trouble, the employee could be laid off or have her or his salary reduced. If the employee owns stock in the firm, then there is a double whammythe employee is unemployed or gets a lower salary and the value of the stock falls as well. So owning stock in your own company is a very risky proposition. Most employees would be better off diversifyingowning stock or bonds in other companiesso their fortunes would not depend so much on the firm for which they work. 5.To a macroeconomist, saving occurs when a persons income exceeds his consumption, while investment occurs when a person or firm purchases new capital, such as a house or business equipment.a.When your family takes out a mortgage and buys a new house, that is investment because it is a purchase of new capital.b.When you use your $200 paycheck to buy stock in AT&T, that is saving because your income of $200 is not being spent on consumption goods.c.When your roommate earns $100 and deposits it in her account at a bank, that is saving because the money is not spent on consumption goods.d.When you borrow $1,000 from a bank to buy a car to use in your pizza-delivery business, that is investment because the car is a capital good. 6.Given that Y = 8, T = 1.5, Sprivate = 0.5 = Y T C, Spublic = 0.2 = T G.Because Sprivate = Y T C, then rearranging gives C = Y T Sprivate = 8 1.5 0.5 = 6. Because Spublic = T G, then rearranging gives G = T Spublic = 1.5 0.2 = 1.3.Because S = national saving = Sprivate + Spublic = 0.5 + 0.2 = 0.7.Finally, because I = investment = S, I = 0.7. 7.a.If interest rates increase, the costs of borrowing money to build the factory become higher, so the returns from building the new plant may not be sufficient to cover the costs. Thus, higher interest rates make it less likely that Intel will build the new factory.b.Even if Intel uses its own funds to finance the factory, the rise in interest rates still matters. There is an opportunity cost on the use of the funds. Instead of investing in the factory, Intel could invest the money in the bond market to earn the higher interest rate available there. Intel will compare its potential returns from building the factory to the potential returns from the bond market. If interest rates rise, so that bond market returns rise, Intel is again less likely to invest in the factory.Figure 28.a.Figure 2 illustrates the effect of the $20 billion increase in government borrowing. Initially, the supply of loanable funds is curve S1, the equilibrium real interest rate is i1, and the quantity of loanable funds is L1. The increase in government borrowing by $20 billion reduces the supply of loanable funds at each interest rate by $20 billion, so the new supply curve, S2, is shown by a shift to the left of S1 by exactly $20 billion. As a result of the shift, the new equilibrium real interest rate is i2. The interest rate has increased as a result of the increase in government borrowing.b.Because the interest rate has increased, investment and national saving decline and private saving increases. The increase in government borrowing reduces public saving. From the figure you can see that total loanable funds (and thus both investment and national saving) decline by less than $20 billion, while public saving declines by $20 billion and private saving rises by less than $20 billion. c.The more elastic is the supply of loanable funds, the flatter the supply curve would be, so the interest rate would rise by less and thus national saving would fall by less, as Figure 3 shows.Figure 3Figure 4d.The more elastic the demand for loanable funds, the flatter the demand curve would be, so the interest rate would rise by less and thus national saving would fall by more, as Figure 4 shows.e.If households believe that greater government borrowing today implies higher taxes to pay off the government debt in the future, then people will save more so they can pay the higher future taxes. Thus, private saving will increase, as will the supply of loanable funds. This will offset the reduction in public saving, thus reducing the amount by which the equilibrium quantity of investment and national saving decline, and reducing the amount that the interest rate rises.If the rise in private saving was exactly equal to the increase in government borrowing, there would be no shift in the national saving curve, so investment, national saving, and the interest rate would all be unchanged. This is the case of Ricardian equivalence.9.Because new computer technology enables firms to reduce inventory investment, the demand curve for loanable funds shifts to the left, as shown in Figure 5. As a result, the equilibrium quantity of loanable funds declines, as does the interest rate. The decline in the interest rate then increases investment in factories and equipment, but overall investment still declines. Figure 510.If world savings declines at the same time world investment rises, the supply curve of loanable funds shifts to the left and the demand curve shifts to the right. Figure 6 illustrates the result. The world interest rate will rise, while the overall effect on the equilibrium quantity of loanable funds is ambiguousit depends on the relative sizes of the shifts of the two curves and on their elasticities.Figure 611.a.Investment can be increased by reducing taxes on private saving or by reducing the government budget deficit. But reducing taxes on private saving has the effect of increasing the government budget deficit, unless some other taxes are increased or governm